How We Survived a $70,000 Pay Cut

Today’s post is long, but I think it’s worth the read. If you want to change your life, pursue a dream job, or protect your family from a layoff or massive pay cut, then take 5-10 minutes and learn how we were able to survive losing $70,000.


When I originally started to draft this post, I felt the need to explain to you just how much $70,000/yr (or $4,000/month in take-home pay) is.

I wanted to make sure you were able to comprehend that $4,000 a month could buy you (1) a 5-day cruise for 2 in the Carribean (including airfare), (2) front row tickets to your favorite concert or KU basketball game (assuming they’re not playing MU or K-State), and (3) either a nice $1500 camera, HD TV, laptop, three iPad, or any other combination of technology gadgets that may tickle your fancy.

I also gave some other examples of what exactly you could do with that kind of money each and every month, but my guess is that you realize $70,000 is A LOT OF MONEY — regardless of who you are.

4 Keys to Surviving a Massive Pay Cut

Holly and I certainly didn’t wake up one morning and have this awesome idea about over-hauling our lives, flipping things upside down, and sacrificing merely for the sake of it.

We’ve done all of those things because they’re necessary; necessary to accomplish the goals we’ve set for ourselves, our family, and our lives. They’re necessary because you can’t keep doing the same things you’ve been doing and then expect something to change.

As you read through the rest of this post, I just want you to keep in mind that change takes time. The key is getting started. Once you’ve gotten started, just focus on taking one step in the proper direction each day, and eventually you’ll find that everything about you (and your life) has changed.

Key #1. If you live without it, it’s as if you never had it

Prior to the time of this transitional period (okay, “transitional period” may be an understatement. Something like “flip-your-life-upside-down-shake-twice-don’t-stir-throw-it-off-a-cliff period” could be better suited there), Holly and I decided we were going to start working our way out of debt.

The only way to get out of debt with gazelle-like intensity is to live on substantially less than you make and throw all of your “extra” money towards debt every month. So, while we were making around $140,000/yr, we were living on less than $40,000 of it.

By doing that we were able to pay off substantial amounts of debt in a short period of time, while also paying cash for a car (new to us), wedding rings, honey moon, a vacation, and half of our wedding.

Before I just brush over this step, I need for you to carefully read it again…because it’s very important. Living on less than you make is extremely difficult. It’s one of those easier-said-than-done things. What typically happens in this country, regardless of income, is that we spend EVERYTHING we make (and most of us go into debt beyond that). I’ve coached people that make minimum wage, some that make $20/hr, and others that take home $10,000/month. And that statement applies to all of them. Everything is relative. Income and lifestyle adjust in the same direction.

The fact is, regardless of your income, you MUST learn to live on substantially less than you make. Doing that will allow you to take a lesser-paying job in the event that (1) you want to pursue your dream job or (2) you get fired/laid off and can only find work that comes with a reduction in pay.

Key #2. Changing Lifestyle

This is the area where you you can take some tangible steps and it really is where you’ll be able to make some progress on key #1.

Accept hand-me-downs

Never be ashamed of using worn items (be it from family or a place like craigslist). I made this realization a couple of months ago, but if you look through our house, there is literally not a single high-priced item that we bought new from the store. Seriously. Our beds, kitchen table, silverware and plates, washer/dryer, couches, TVs, coffee tables, and cars, were all used. They were all hand-me-downs from family members (except the washer/dryer and cars).

Now, of course I want to buy new items. But, I’d rather pay off debt first and get my family on a sound financial setting before I do that. I just have to consistantly remind myself that my day will come, it’s simply a matter of time.

No Eating Out – Ever

So, “ever” may be a little strong. But Holly and I remain on a relatively strict monthly budget and it doesn’t include a lot of eating out.

If you’re trying to get out of debt, or you’re struggling with money, then Dave Ramsey loves to say that “you shouldn’t see the inside of a restaurant unless you’re working there.” Well, when we first got started on our journey 5 years ago, I took that advice a little too literal.

Holly and I had been dating for a little over a year and Valentine’s Day rolled around. She asked me if we were going out that evening. To be fair, I didn’t really expect that to come from her because she KNEW I WAS ON A MISSION. We had agreed not to buy each other things, so the question caught me a little off guard. So, I told her “no.” She then proceeded to ask me if we could at least buy a DiGiorno frozen pizza — apparently she was tired of eating Pasta Roni every night. What she didn’t know was that I had already spent all of my grocery money for the month (and there was no eating out money at that time) and had loaded up on my Pasta Roni, Ramen Noodles, and Totinos pizza. So, I told her “no” again.

You see, when I first got started on my plan I was a serious about it. There was no such thing as eating out. There was only progress to be made, debt to pay off, and goals to accomplish. I had gotten to the point that I was sick and tired of struggling with money and tired of working a job that I dreaded, so I was going to do whatever was necessary to change things. So, to Holly’s chagrin, we ate Pasta Roni for the 3rd night in a row. Sorry, Toots. True story though.

Get on a Strict Grocery Budget

To this day Holly and I plan out our weekly menu and make a grocery list accordingly. Early on our budget for groceries was about $40/week but now we’ve bumped that to $70. We literally take our grocery list, pencil, and calculator into the store and tally everything up before we hit the register. It was a little embarrassing to start, but I quickly got over it. I’d rather be embarrassed and making progress each month, than fit in and be going into debt. We don’t use coupons often, but we do buy off-brands on a regular basis. We rarely buy name brand products and it has saved us a significant amount of money over time.

No Cable Television

Frankly, cable is a great thing to cut (unfortunately it is where I get major resistance from my male clients). It’s a complete waste of time and money. We throw away our lives, opportunities to grow, and precious time with family for the sake of plopping ourselves on a sofa cushion to rot our brains for 28 hours (on average) each week.

I really did miss cable when we first got rid of it but I’m really thankful we did. It’s amazing how much more productive you can be without it. It’s obviously up to you, but we did go ahead and subscribe to Netflix. We canceled the streaming because it still provided us the opportunity to waste too much time (my self-discipline sucks), so we just have (2) DVDs mailed each week.

Decrease Cell Phone Package

This is a category where most people can cut back on. The question is whether or not you’re willing to. Holly and I were: a little over a year ago we decided to get rid of internet on our phone — blasphemy, I know. Our cell phone package (for 3 phones) is only $115/month.

Have Proper Amounts/Types of Insurance

I’ll write more about this topic and about types of insurances down the road, but this is definitely a place where I see people get taken advantage of and spend unnecessary money. Not because insurance salesmen are bad people, but more-so because the buyer is just ignorant and lazy.

Holly and I shop around our insurance products to ensure we are getting the best price with the best companies out there — you shouldn’t do it all the time, but once every year or two is certainly a great idea. We only have liability insurance for both of our cars — which saves us quite a bit of money each year. Our cars aren’t worth much and we have enough savings in place to buy a new car if something were to happen.

We have the cheapest health care plan that my wife’s work offers (which is good for us since we’re relatively healthy — well…it was supposed to be good for us before we had a collasped lung and a broken hand this past year); we have term life insurance, which is the cheapest form of life insurance there is. Lastly, by reviewing our home owners insurance documents on an annual basis (when they get automatically renewed), I was able to spot that our insurance company hiked rates up last year because they ‘assumed the value of our home and personal belongings went up.’ So, I challenged them on their increase, and got them to knock our coverage back down to where it should have been. No reason to pay for insurance on $90,000 of personal property when we only have about $10k worth of “stuff.” That’s literally a waste of money.

Always know what type of insurance you have and the coverage it provides. You may very well be massively over-insured or are paying high rates simply because you’ve been with a company for a long time and they don’t believe you’re going anywhere (I see it the most with people in their 50s and 60s).

Limit Luxuries

A few years prior to the major pay decrease, I kind of lived like a rock star. Front row concert tickets, eating out/going out every night, etc. Well, needless to say if you want to make financial progress, you probably can’t do those things (unless you make a ton of money).

Holly and I rarely go on vacation — maybe once every couple of years. And even when we go on vacation we try be “smart” about it by looking for deals. We also rarely do things that cost money; we certainly love spending time with each other and going out, but we don’t go to movies, sporting events, concerts, or anything else that involves Hamilton, Jackson, Grant, or Benjamin Franklin.

For some of you that may sound miserable, but I’ve found that having fun and enjoying things doesn’t require money to be spent.

*Clearly Define Needs & Wants*

This is probably the biggest lesson I’ve learned and the key to our ability to make the $70,000 change in our life.

Americans’ views of needs and wants differ greatly by social status and income, however the definition needs little interpretation or argument.

I’ve had other people be so kind and tell me that I need a new car, washer and dryer, TV, and other various appliances. Heck, I tell myself that sometimes. But I don’t. Society lets me know that we need cable, internet on our phones, a smart phone (which I don’t have), and an iPad, Xbox, PlayStation, BlueRay, and/or Wii. But we don’t.

We have everything we NEED. All of our “stuff” works. Maybe not perfectly, but 95% of the time they fulfill their purpose.

Learn to clearly define your needs and wants and you’ll take some great steps towards financial freedom.

Key #3. Pay Off & Limit Debt

I didn’t sit down 5 years ago, have a goal that involved taking a $70,000 pay cut, and create a way to make that happen. While that would have been pretty awesome, it’s just not how things work. So, without really knowing it, one of the things we did which allowed us to handle the massive pay cut was to eliminate (and limit) some of our monthly debt payments.

So, obviously one of the things you can do to prepare yourself for a layoff, downsize, dream job opportunity, or pay cut, is to get rid of debt!

No Car Payments

Dave Ramsey firmly believes that the middle class will greatly struggle to build wealth if they have car payments. From everything I’ve seen (personally and coaching), I’d have to agree with him.

Fortunately for Holly and I, we’ve never had car payments. I’m not really sure how we’d manage if we had them. I’m not proud of it, but I’ve driven some “beaters” in my day: (1) a ’93 2-door Cavalier, (2) the wonderful 1988 2-door, baby blue, Mercury Cougar was probably the best one, and (3) my current car that I bought 3 years ago — a multi-color 1997 Honda Accord that has serious water-damaged paint from sitting after an accident for a couple of years. That one I named Dave, in honor of Dave Ramsey. Thanks Dave.

Paid off Student Loans & Credit Cards

Holly and I started with $110,000 in total debt (not including mortgage). Wow…I know. And you thought your situation was bad. But before taking the pay cut we paid off nearly $50,000 of that total!

Doing that drastically lowered our monthly debt payments and it allowed us to handle the eventual decrease in pay. So, one of the best things you can do for your family is to get your financial life in order! Pay off as much debt (medical, personal loans, credit cards, student loans, car payments, etc) as you can and get those payments out of your life forever!

Reasonable Rent or Mortgage

Along with a decline in interest rates, there has probably been no greater deterrant to Americans’ ability to save money than the massive rise in housing and rental prices. The Amercan Dream requires that every person own a home — a big home too. I’m not just talking about a roof over your head; I’m talking about 3 bedroom, 2 bath, a kitchen with stainless steel appliances and granite counter tops, 3 car garages, and a finished basement complete with a movie room or “man cave.”

Fortunately for Holly and I, we didn’t buy more than we could afford. We limited our monthly house payment and it allowed us to not have our hands tied when I wanted to make a change in my career.

Most don’t realize this but a larger house also means higher property taxes, home owners insurance, utility bills, and house repairs. A 3,000 square foot house doesn’t just have a larger monthly payment than a 1,500 square foot house; it comes with about $700 in added monthly expenses.

Key #4: Contentment

Most people look at us and think we’re crazy for all that we’ve given up. Let’s be honest here, I even wonder if I’m crazy sometimes.

There are two sides of me: the person that loves stuff and comfort, and then there is the person that wants to stand for something, have a purpose in life, believe that God would want us to work jobs we love, and be happy and have everything we need in the process.

The change in pay hasn’t changed my want for stuff. I still want to go on a vacation to Fiji and stay in a 5-star resort, I want a new flat screen TV, and a vacation house in Colardo. I still want a new bed, couches, cars, an Iphone, Ipad 2, and a bar-b-que grill.

But what I have learned is that I can live without all of those things and still be happy. I have all that I really need.

Although my want for things will always be there, my view of life and stuff no longer defines who and what I am.

What I can do with my career is no longer dictated by my lifestyle and financial obligations. I can go work full-time at McDonald’s and make ends meet if I need to.

Dave Ramsey believes that having Financial Peace involves having wealth. My definition is different: having all the things that we need, never worrying about paying any of the monthly bills, while working a job I love in the process.

Maybe “Financial Peace” isn’t the right phrase. Maybe something like “FREEDOM” would better describe how I feel.

Redefine the American Dream.

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Picture by winnond.

About the Author

By , on Jan 10, 2012
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of

How to Become Rich e-Course

Budgeting 101


  1. Stacie S. says:

    I love this post. My family is still working our way out of debt but have paid off over $100K in debt with only about $14K left to go. I think #4 – Contentment has been the most difficult for me personally but the most ultimately rewarding. When we realized that we don’t need “stuff” but just quality relationships to be happy and content our road got a lot easier.

  2. Laurie says:

    Andy, hello! We are new to the debt payoff thing, as of Jan 1st of this year. We have been scouring the Net for wise advice and support, as we’ve got a big hurdle to overcome.

    Can I just say that this post is one of the most well-thought out, wise, informative posts I’ve come across?

    Thank you, for laying it on the line and saying what needs to be said to America, like it needs to be said. You’ve given us more motivation than ever to stay gazelle-intense and get things done!

  3. Buck Inspire says:

    Great tips, Dave would be proud of you. I had to chuckle at the part about your wife asking to eat out. I admire your discipline on keeping with a budget. However, is it possible to still obtain your goal without going so over board on dining out on a special occasion? Life is short and you have to enjoy it a little too. However, it seems your mission and goals give you the most enjoyment so more power to ya!

  4. Leap of Faith says:

    I’ve been in banking and fianance for 13 years. I started as a part time teenager. Kept working hard and getting promoted. Even became an officer. Was very unfulfilled. Whatched the industry morph from a service industry to a sales industry. I was even good at sales. But my heart wasn’t in it. I have a passion for animal care. I have a chance at the type of position… but its litterally HALF my salary. I’m terrified but have such support that it will all be ok. It will be an adjustment but it will be ok. I have no debt. Car is paid for and no credit card debt. But no real retirement to speak of. I just don’t know if the financial sacrafice outweghes the sacrafice of being miserable and cranky b/c I don’t enjoy what I do anymore. I’m 28 and feel I’m on the cusp of being too old for a career change. I have no husband or children. If I start over with my career that will push back any family planning as well. I just would like some insight.. as this decision is tearing me up.

  5. Shilpan says:


    This is one of the best articles I’ve read in long time. It hits the nail right on the head for anyone who wants to have peace with his/her money. What I love about your writing is that you are focusing not only on the money aspect, but also on contentment or personal growth. They both are alter ego. I love it. Thanks for writing such a thought provoking post.

    • Andy says:

      Thanks, Shilpan!

      I believe that there are two sides to managing money well: behavior and knowledge. That is why I often write about personal growth and contentment. Unless you’re a high-income earner, you will never have wealth and financial peace if you don’t have contentment.

      70% of Americans spend everything they make each and every month. Sure, some of it is because they don’t make enough money, but much of it is because they’re not content with their lives and have bought so much junk that they have too many monthly payments to handle. If you don’t learn how to say no and find contentment then you’re bound to a life that will be eventually be miserable one you reach “retirement.”

  6. Life is too short to be miserable. A $70k paycut is a lot to give up, but still a small price to pay for a happier life.
    I’m also getting close to giving up a 6 figures job and I can’t wait for that day. 😉

    • Andy says:

      I agree on the miserable part.

      $70,000 was a lot of money to pass up. It’s not to say that I won’t make that much again, but at the time it was an unknown. I love my job and I would NEVER change any of the decisions I made. Stress/unhappiness from work affects so many other parts of your life. I believe it’s extremely important to work a job your love!

      Good luck with your transition!! When is it coming??

  7. Andy,

    Sorry for my reading problems, but can you clarify some stuff:

    1) $70,000 pay cut, but still have the same job, or different job?
    2) What is the job if it is a new job or old job?
    3) You write we made $140,000… so does that mean you guys make $70,000 combined now? If so, what is the income split?

    Sorry if this is explained already. I read the post a couple times and couldn’t figure out the originations of the pay cut. I agree with all your other points.



    • Andy says:

      Thanks for the comment, Sam!

      I left out many of these parts but I don’t mind sharing with you!

      1) Totally different job in a totally different industry. I left everything I knew to pursue something I cared about.
      2) I am currently a financial planner, investment advisor, and also help people with budgeting/getting out of debt (Dave Ramsey style)
      3) We indeed make around $70k now. Split is around $25k/$45k. I am the $25. That will be changing a bit now that I’m 100% commission, but that’s what it was last year.

      The pay cut was simply due to being miserable doing what I was doing. I was tired of working a job that meant nothing and the only value it added to my life was the financial gain.

  8. Scott says:

    Hi Andy,

    What device or system were you using to stream Netflix to your TV?


  9. Betsy H. says:

    I read your post and thought it interesting, but I was too distracted by some basic mistakes. This mistake is not unique to you, others make it all the time, but this is the first opportunity I’ve had to offer feedback. “For Holly and I” is WRONG! For is a preposition. According to the rules of grammar that were hammered into me too many years ago to admit, prepositions are ALWAYS followed by objective case pronouns. It should be “For Holly and me.” Would you say “This is for I” or “send it to I” – I can only hope that you realize both are wrong. Adding Holly to the sentence does not change the case of the pronoun. Whether is is for me, for Holly and me, or for Holly and the neighbors and Congress and me – the number of people does not matter.

    This is too common a mistake. Have you ever watched The Bachelor? It seems like every other contestant is talking about “the connection between he and I” OR “the looks he was sending to I” or whatever. Please don’t take this as an attack on your frugal topics – but please, check a book fo grammar if in doubt. Ask an English teacher! Do something! Any time you use a preposition and follow it with a pronoun, you must use the objective case. Failure to do so does not have any grand consequences, but it does make me trust the knowledge/experience/advice of the writer less.

    • Andy says:


      I’m sorry! I know I’m terrible with grammar, puncuation, and my writing style is confusing.

      English wasn’t my subject in school…I’m a math and science kind of guy. The 2nd post I ever made here was laying out what people could expect on this site simply because I knew that was one of my weaknesses.

      Even thought I acknowledge that, I know that I must get better and eventually I’ll get around to it!

      Sorry again and thanks for the corrections. I’ll start paying closer attention.

      P.S. Shamefully I’ll admit I’ve watched ONE episode of the Bachelor. My wife made me do it. 🙂

  10. Stacey says:

    I’m finding that if you’re married the most important thing to have when trying to get out of debt is a spouse willing to make the sacrifices needed to get out of debt. It absolutely can’t be done when one spouse is spending everything you’re trying to save. If I were to cut cable I’d have a fight on my hands…he’d be fine without the cell phone maybe…not sure. I just keep making small changes like grocery budget and throwing what small amount I can at our debt. It might not be gazelle like intensity but I’m praying we’ll get there eventually.

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